Friday, April 1, 2011

I was invited to speak at the KPMG eGaming Summit in Gibraltar (31 March 2011) on the topic of "Monetising Game Play on Social Network Sites". The presentation gives an overview of the current state of the virtual currency industry and also introduces bitcoin as the ideal digital representation of a physical casino chip.

This is really cool. How well did you think the politicians of Gibraltar received the idea of bitcoin? Do you think Gibraltar might eventually apply for what is said here? If online gambling is the country main industry, I suppose they have interest in it... but I wonder how strong can international "diplomacy" be over these tiny countries...

It's not very clear to me how independent Gibraltar is from UK, though. Actually before you saying they have a prime-minister, I thought they were technically just like a UK city overseas. Does financial laws from UK apply in Gibraltar?

Jon Matonis said:

The attendees came from various places (i.e., Malta, Isle of Man, Ireland, UK, Bulgaria, etc) but they were all involved at some level in the online gaming industry. A member of the EU, Gibraltar has its own constitution and governs its own affairs via its own elected parliament. The independent judicial system of Gibraltar is modeled on the common laws of England & Wales which is seen as a benefit in business dealings (compared to Panama or Costa Rica for instance). Financial law follows the EU and the UK, but having said that Gibraltar has been very effective at leveraging the recent e-money legislation and e-money companies do quite well in Gib. Several have been set up and they are permitted to issue VISA and Mastercard prepaid cards without having a full bank license which is required in the US.

I wouldn't get too hopeful though about any country formally embracing bitcoin because they all still answer to OECD/FATF and Know-Your-Customer anti-money laundering laws (you would almost have to go Libya or Iran if you wanted to ignore OECD/FATF). Considerable pressure still comes from the US government on these matters and online gambling companies respect the US law of not allowing US players.

The bottom line is that the attendees do not seem to perceive the payment method as a "competitive advantage" so they happily receive the other fee-based payment alternatives. They tend to focus more on the competition for eyeballs and affiliates feeding them traffic so in many ways it resembles the economics of online porn.

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About Me

I am an e-Money researcher and a Founding Director of the Bitcoin Foundation. My career has included senior influential posts at Sumitomo Bank, VISA, VeriSign, and Hushmail.

"Free-market protagonists, such as Matonis, regard cybercash as better than traditional government-issued or -regulated money, because it is determined by market forces and thus nonpolitical in nature." --Robert Guttmann, Professor of Economics at Hofstra University, in Cybercash: The Coming Era of Electronic Money, 2002

"Matonis is quite correct that the new technology makes easier the use of multiple private currencies." --Mark Bernkopf, Federal Reserve Bank of New York, in "Electronic Cash and Monetary Policy", 1996

"Matonis argues that what is about to happen in the world of money is nothing less than the birth of a new Knowledge Age industry: the development, issuance, and management of private currencies." --Seth Godin in Presenting Digital Cash, 1995